Oil and water don't mix, and neither do personal and project funds when it comes to home improvements.
Homeowners should separate household cash from monies spent on remodeling or makeover jobs budgeted for more than a few thousand dollars.
It makes sense to keep "milk money" a safe distance from project funds. For one reason, it's simply good financial practice. Mixing paychecks and routine bills along with expenditures for materials and construction labor can disrupt household budgets.
¢ The most manageable solution is to open a short-term checking account for the life of the project. Banks typically offer free checking to existing customers. Other banks dangle free checking as an enticement to win new business.
¢ Short-term checking is especially helpful if mortgage or home equity loan financing is involved. Most lenders offer online capability to help manage and track where the money goes. This creates a helpful paper trail in the event conflicts arise with contractors or retailers.
¢ Many checking accounts come with credit card options. You can charge materials to this account and avoid co-mingling faucets and drywall with groceries and violin lessons. Just be sure to close out the credit card when you pull the plug on the checking account.
¢ Another plus to short-term checking is that some lenders will advance cash only as portions of the project are completed. A specialized account makes it more comforting if you need to sit down with your banker to talk about progress of the renovations or improvements.